Weakening dollar's impact on market

I have contradictory messages about the impact of a weakening dollar on the economy and markets.

On the one hand, US goods become cheaper for foreignor countries or alternatively, they can charge higher prices and reap greater profits--the dollar serves basically as a credit note which the foreign country who accepts the dollar can only cash in by using them ultimately by buying American goods or holding up the American real estate market. Worse case scenario, if some foreign countries stop accepting the American dollars that will stabilize the trade deficit--i.e. there becomes a theoretical limit.

A weakening dollar may result in the markets going up. However, everybody seems to forget that even if you get more pieces of green paper back when you decide to sell, you probably won't be able to exchange them for as much "stuff".

Seen in isolation, a weaker dollar is good for future export growth, and reducing imports, thus indicating a stronger dollar and a stronger stock market. However the weak dollar in the first place is also a symptom of low export, high import and general sluggishness in the economy.

Its like with rate cuts, they are good for the economy in isolation, but they are being cut because the economy is not performing well.

i disagree. since were a consuming nation a weaker $ will cause inflation to sky as country's exporting here will demand more $'s for the same goods. its also a huge negative for all country's buying are bonds as on currency translation alone they'll lose money. plus all the americans that buy goods from abroad and travel abroad will weaken big time hurting other country's economies. isn't the weak $ what caused bonds to sky and the stock market crash of 87?

Yes a weaker $ is clearly inflationary, but not all products are imported, domestic productions becomes more competitive.

The flip side of the US as a big consuming nation argument is that if demands from the US shrinks, exporting countries canât demand much more $ for the same goods even if the $ is getting weaker.

Itâs also easy to imagine a weak $ can cause bond yields to skyrocket if foreigners are dumping bonds as the $ starts to fall, but this is irrational logic. From a rational point of view falling bond prices and a falling $ makes bonds more attractive to foreigners as an investment in double speed, but once the ball starts rollingâ¦